Gift Cards With Bells and Whistles

Stephanie Clifford|The New York Times

Saturday, 11 Dec 2010 | 1:10 PM ETThe New York Times

SHARES

This year, retailers’ gift cards record messages, light upor smell like gingerbread. Some feature the work of noted photographers, others incorporate personal photos. Some can be sent via text message or Facebook posts, and others are tactile (like the one with little holes for a finger puppet).

Now, if only the recipients wanted them.

While 62 percent of people surveyed by Consumer Reports said they planned to buy gift cards this year, only 13 percent said gift cards were their most-wanted gift. They make for a strangely specific generic present: I have $25, but I can spend it only at Jiffy Lube?

A flock of companies is trying to make gift cards more useful and take a piece of their value by offering to buy, sell and trade them.

Meanwhile, retailers are devising new ways to make the cards more appealing, because gift cards increase shopping traffic and encourage higher spending once people visit to redeem them. The cards also essentially act as an interest-free loan, where the retailer takes money now and does not have to give anything in return for a while.

Home Depot is selling selling a card that, when held up to a computer’s Web camera, suggests products. A Wal-Mart card, when scratched, smells like gingerbread, while Barneys New York has limited-edition cards featuring photographs by Nobuyoshi Araki. An American Eagle Outfitters gift card can be sent as a text message, Amazon.com'scanbe sent as Facebook posts, and a company called Wildcard lets people send a variety of gift cards to recipients’ phones through its app. As for that finger-puppet card, it is a bear, and your fingers poke out as its arms — courtesy of Target.

But however entertaining they look, gift cards still seem to fall into the I-just-gave-up category of presents.

“Ended up getting Holly a gift card. Had no other ideas :(” one person wrote on Twitter. “Jacqueline needed to get a gift card for the boring members of my family,” a second reported. “Christmas shopping today was nothing but fail. Were getting close to gift card territory, folks,” a third posted.

Consumer groups also warn against gift cards. Regulations that went into effect in August made cards much better for shoppers, the groups say: they limit fees the issuers can deduct from the gift card after inactivity, and require at least five years before the gift card expires. Still, retailers can go bankrupt, rendering the card invalid; they can limit the locations or types of purchases it applies to; and they can decline to refund it if it is lost.

“You do have a little more protection from fees,” said Gail Hillebrand, senior lawyer for Consumers Union. But, she said, many people still forget about gift cards, meaning consumers spend money that does not buy anything. In the survey, conducted in October, 27 percent of people still had not redeemed gift cards from the year before. Last year, consumers lost about $5 billion in gift card value to fees or expirations, according to the research firm TowerGroup.

Gift card exchange and management sites are stepping into the gap between supply and demand.

Plastic Jungleis the biggest of the sites. It buys unwanted gift cards, including electronic gift cards, paying a discount depending on how popular the issuers are. It currently pays $92 for a $100 gift card from Target, for instance, but $70 for a $100 card from Baja Fresh.

It sells gift cards, too, also at a discount, so that a $100 Target card can be bought for $97. (Its prices fluctuate throughout the year.)

“We don’t think it’s a good thing if someone gets a gift card that they can’t use,” said Bruce Bower, chief executive of Plastic Jungle. “We create liquidity for it.”

Unlike sites like Craigslist that offer gift cards for sale, Plastic Jungle validates “every card received by us before we pay out, then guarantee that it will work as promised,” he said. When someone buys a card at its site, Plastic Jungle mails it to the purchaser, or sends the buyer an online code, and it can be used immediately. It deals only with cards that cost $25 and up.

There are several competitors with similar models, including GiftCardRescue.com,Cardpool.com and MonsterGiftCard.com, but their inventories were smaller; Plastic Jungle recently had about 670 cards for sale, and the others had about 100 or fewer. There are also pure exchange sites, like TheGiftCardTrader.com, where consumers can swap cards between each other.

In the last year, Plastic Jungle has grown quickly, selling about $10 million worth of gift cards, Mr. Bower said. That is about five times the business it did a year ago.

Mickey Mikeworth, an entrepreneur in Minneapolis, says she was never much of a gift card fan. But she has now bought about 100 cards from Plastic Jungle. She realized other people’s bad presents could save her money, she said.

“I mean, I’m just not a coupon person,” said Ms. Mikeworth, 44. “The way to get more out of your budget is to live your life the way you like to live it, and just pay less for it.”

So she began buying discounted gift cards from the site at places where her family already spent money — Gap and Limited for her children’s clothes, movie theaters, Applebee’s for dinners, Godiva chocolate for treats for her husband.

By combining the gift card discounts with other promotions the stores had, Ms. Mikeworth said, “we were getting things at 70 to 90 percent off,” and the family has saved hundreds of dollars. And if the cards were occasionally out of season — she has purchased Hanukkah, Christmas and wedding-themed cards from the site — she did not mind.

She applies them to her business, too, using Panera gift cards for office lunch buffets, Office Depot cards for supplies and other cards for employee rewards.

“Now, we’re getting good at them,” she said.

For those who have a habit of forgetting about gift cards they have received, a site called ScripSmart allows people to sign up and enter their gift card information. It then sends reminders about expiration dates or alerts if the retailer is showing signs of going bankrupt.

ScripSmart also scores cards based on how consumer-friendly their policies are. It rates Jack in the Box, the Container Store and Gap near the top, with American Apparel, Rite Aid and Bon-Ton near the bottom. Phone apps including Wildcard and Tango also help keep track of gift card balances.

Options like these make gift cards more useful, said Steven Gill, an assistant professor in the accounting school at San Diego State University. “If you receive a gift card from someone, and it’s a store or a retailer that you just know you’re never going to use, it’s a great way to unload that card,” he said.